Tags: sce

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03/28/14

  11:33:00 am, by Jim Jenal - Founder & CEO   , 1129 words  
Categories: Solar Economics, Commercial Solar, Residential Solar, Non-profit solar, Energy Storage, Net Metering

Net Metering Gets 20-Year Reprieve

CPUC LogoWhen Governor Brown signed AB327 last October, one thing was clear: net metering as we presently know it was going to go away, we just didn’t know how soon. Now, thanks to a ruling yesterday by the California Public Utilities Commission (CPUC), we know: 20 years.  Here’s the scoop.

Background

Around the country, utilities have been pushing hard against net metering—the tariff under which solar customers receive credit for surplus energy production (say during the day when no one is home or on a weekend when a commercial facility is dormant) that offsets energy consumed from the grid (for example, at night).  The solar customer’s bill reflects the “netting out” of those two quantities (total energy exported versus total energy imported from the grid) and the customer only pays for the difference.  If the solar customer is a net energy producer (quite rare), the utility has to cut the customer a check for the surplus.  (Unless you are an LADWP customer, sorry.)  Last year’s bill sought to end the squabbling and provide certainty to solar customers.

CPUC’s Ruling

Under the law, the CPUC is required to devise a replacement for the current net metering arrangement, but yesterday’s ruling does not disclose what that will be.  Instead, the ruling establishes a sundown provision for customers who are either currently, or will become net metering customers under the current rules before July 1, 2017 (at which time the present net metering rules will be closed to new participants).

Solar system owners will be entitled to operate their systems under the net metering rules for a full 20 years from the year in which they interconnect their system.  That, decided the CPUC, will provide sufficient time for solar customers to recoup their investment.  However, solar customers can transition to the new rules, whatever those may turn out to be, sooner at the customer’s election.  The year of interconnection is determined by the date on the Permission to Operate letter received from the utility, and the twenty-year term ends on the last day of the twentieth year.

System Modifications

What happens to systems that are modified after July 1, 2017?  Does the new portion of the system get its own 20-year net metering extension or is it simply subsumed into the term for the original system?  The CPUC split this into two possible scenarios: repairs or modifications that did not increase system capacity by more than 10% of the original design will operate under the original 20-year term, neither resetting or ending it.  But system changes beyond the 10% limit will either have to be metered separately, or the entire system will have to be transitioned to the new tariff structure.

Change of Ownership or Location

The next question to be resolved was what happens if the system is sold or relocated?  After all, many solar customers purchase systems expecting it to increase the value of their home—but if the sale eliminates the net metering agreement, that added value could be lost.  The utilities, of course, disdained any such concerns, arguing that the net metering term should be tied to the original owner only.

Fortunately, the CPUC sided again with solar system owners. Thus, systems will remain under net metering for the full twenty-year term, regardless of changes in ownership, as long as the system remains at the original location.  However, if the system is physically moved to a new location, the CPUC deems that to be a new interconnection and the old net metering agreement would no longer apply.

Energy Storage Systems

The decision yesterday also took an important step in addressing the impact of adding energy storage systems to an existing solar system operating under the twenty-year net metering rule.  The CPUC ruled that “to the extent that energy storage systems are considered an addition or enhancement to a renewable electrical generation facility utilizing a NEM tariff, we find that they should be treated in the same way, and subject to the same transition period, as the underlying renewable generation system to which they are connected.”

IOU Reporting

The July 1, 2017 deadline is an absolute cutoff, but the actual end of new net metering agreements can actually be reached sooner if the utility in question has reached its “net metering cap.” The CPUC previously set the cap at 5% of the utility’s “non-coincident aggregate peak load.”  To allow perspective solar customers to know if their utility is going to hit that peak before the July 1, 2017 deadline, the CPUC ordered the three IOUs to report to the Commission (and on the utility’s website), on a monthly basis, their progress toward that cap.

Required Disclosures

Finally, the ruling addressed whether solar installers should be required to provide prospective clients with disclosures about the ruling, specifically as to the duration and limitations on existing net metering agreements.  According to the decision, IREC and SEIA opposed such a requirement on the grounds that it exceeds the authority of the CPUC.  As a legal matter, that may well be true, but SEIA’s position strikes a sour note.  Frankly, the solar industry is in serious need of mandated, standardized disclosures on everything from system components, warranties, energy yield, true costs, etc., to say nothing of issues surrounding the changes to net metering.  SEIA should be producing model documents for its member installer companies to use and drafting model legislation to mandate their use.

In any event, the CPUC punted the requirement issue for installers, saying:

Solar installers have a legal [citing Business & Professions Code § 17500] and ethical responsibility to disclose to their customers the terms that will apply to renewable distributed generation systems for the foreseeable future, including the applicable tariffs as well as the timing and terms for transition to a successor tariff. Such disclosures provide customers with the information that they need to make educated decisions about their future electric service. Because of this, we expect solar installers to provide honest and complete disclosures on the NEM transition, and we encourage customers to report to the appropriate authorities any misleading or fraudulent information that may be provided to them. At the same time, we require the large IOUs to post information on the NEM transition clearly on their Web sites along with other information about NEM terms, eligibility, and progress towards the statutorily mandated transition trigger level.

Of course B&P section 17500 is entirely generic and provides no guidance as to what disclosures solar companies should provide to their potential clients.  Clearly this is an area that requires legislation and California, as the most mature solar market in the country, should be leading the way here. 

As for Run on Sun, we will revise our Return on Investment materials to reflect a 20-year window instead of the 25-year model we have used previously.  Hopefully that will provide clients with a more accurate estimate of their true ROI.

01/22/14

  07:19:00 am, by Jim Jenal - Founder & CEO   , 405 words  
Categories: All About Solar Power, Utilities, Residential Solar, Net Metering

Petition to Protect Solar Rights

Vote Solar Initiative websiteOur friends over at the Vote Solar Initiative have a petition campaign underway to garner support for California’s solar program.  We’ve signed on and we encourage you to do so as well.

Last year the legislature passed a major piece of legislation, AB 327, that deals with the future of net metering.  While that was a short-term victory for solar advocates, it put the long-term future of net metering in the hands of the California Public Utilities Commission (CPUC).

Alas, that result was a decidedly mixed blessing, as departing Commissioner Ferron recently noted:

But recognize that this is a poisoned chalice: the Commission will come under intense pressure to use this authority to protect the interests of the utilities over those of consumers and potential self-generators, all in the name of addressing exaggerated concerns about grid stability, cost and fairness. You – my fellow Commissioners — all must be bold and forthright in defending and strengthening our state’s commitment to clean and distributed energy generation

Which brings us back to the petition campaign over at Vote Solar. 

Here’s the petition text in full:

Dear California Public Utilities Commissioners,

I am signing this petition because I believe in protecting Californians’ right to go solar and receive full credit for the clean energy they deliver to the grid.

California has more than 200,000 solar roofs, and we expect to boost that number to half a million by the end of 2017.  The policy of net metering has been crucial to recent growth and the creation of local jobs around the state. Rooftop solar systems reliably produce electricity for 30 years or more, and Californians invest in rooftop solar because they expect long-term bill savings over the life of the system.

Under Assembly Bill 327, the Commission must decide how long solar customers may continue under current net metering rules. Changing the rules unexpectedly for customers who have already made solar investments and signed contracts would be unfair and would drastically slow our state’s solar momentum.

I urge you to stay the course and allow customers who install solar under the current program to continue under current net metering rules for at least 30 years.

We believe that the CPUC needs to hear from as many Californians in support of solar as possible.  Trust me, they are already hearing plenty from the lobbyists for SCE, PG&E and SDG&E. 

Please take a moment to add your name in support of rooftop solar by signing Vote Solar’s petition.

01/07/14

  08:36:00 am, by Jim Jenal - Founder & CEO   , 370 words  
Categories: SCE, Commercial Solar

Comparing SCE Rates for Commercial Users

SCE has two rate structures commonly used by commercial customers: GS-1 and GS-2. As part of our new website roll-out, we have been exploring the use of interactive data visualizations and we decided to create one to explore the impact of demand charges under SCE’s commercial rates.

Here’s some background.  SCE’s smallest commercial customers, those whose peak power demand is 20 kW or less, are assigned to the GS-1 rate.  This is a rate structure very similar to what one has at home - charges are based on the total amount of energy used in a month (as measured in kWh).  Moreover, this is a flat rate structure - every kWh costs the same, and does not account for when it is consumed.  (NB: this is changing; over the next year SCE’s commercial customers will be moved to a time-of-use rate structure, but for now, most are not.  We will have more to say about SCE’s commercial time-of-use rates later.)

The GS-2 rate structure, on the other hand, includes all commercial customers with peak power demand between 20 and 200 kW - a very large segment of the commercial customer base.  For them, an additional rate component is introduced - peak power charges, better known as demand charges.  While GS-2 customers pay significantly less per kWh of usage, they more than make up for it in demand charges.  Indeed, during the summer months, GS-2 customers pay for demand charges twice!

The net effect of all this is that GS-2 customers generally pay significantly higher bills than they would if their rate was based on usage alone.  To explore that, we created this visualization.  Derived from the actual rate tariffs (which are linked to on the site), this allows you to compare what your annual bill differential would be against a variety of scenarios.  Since most commercial customers have a peak demand significantly higher than their average, that is the first “knob” to adjust - as average demand becomes a smaller percentage of peak, the differential increases.

Explore SCE's demand rate structure gs-2 vs gs-1

To try this for yourself, click on the image above to go to the visualization page.

We would love to hear your thoughts about this tool, as well as SCE’s commercial rates.  Please let us know what you think in the comments.

10/24/13

  10:56:00 am, by Jim Jenal - Founder & CEO   , 615 words  
Categories: Solar Economics, SCE, Commercial Solar, SDG&E, Energy Storage, Solar Policy, SPI 2013

Storage Send-off - Boosts from State & Private Sector

A key to the growth of solar, particularly commercial solar, is the availability of affordable storage solutions.  Two recent developments suggest that we are about to see dramatic growth in this vital market sector.

CPUC Decision

One week ago the California Public Utilities Commission (CPUC) voted five to nothing approving a plan to require the three investor-owned utilities (SCE, PG&E, and SDG&E) to procure  1,325 MW of energy storage by 2020, with installation completed by no later than the end of 2024. Both SCE and PG&E are required to procure 580 MW each, with the remaining 165 MW allocated to SDG&E.  200 MW of that 1,325 MW total is to be interconnected at the customer’s site.  In addition, the decision provides a timeline for this to happen with the first 200 MW to be procured by the end of next year.

Other electric service providers, like the munis, will have to procure energy storage equal to 1 percent of their annual peak load by 2020.  Those storage systems can also include customer sited and/or customer-owned storage devices as long as they were installed after January 1, 2010.

Large scale pumped hydro storage (greater than 50 MW) is excluded from the program, but storage obtained from plug-in electric vehicles can be counted.

This is a tremendously significant decision as the mandate will surely drive R&D as well as deployment investment and help provide a ready market for these emerging technologies.

Stem Makes its Move

An announcement this week during Solar Power International shows how that investment is already starting to happen.

Stem offeringsStem - the company with the clever technology for using storage to “smooth out” the demand peaks that drive commercial energy costs - just announced a $5 million project finance fund with Clean Feet Investors (CFI).  From the parties’ press release:

The new financing model, which Stem developed in collaboration with CFI, is designed to open access to a wider pool of customers by removing barriers to adoption, enabling up to 15 MW of energy storage to be deployed. With this financing capability, Stem hopes to follow the dramatic growth trajectory pioneered by the third party ownership model in the solar industry. Stem and CFI plan other innovative financing offers for customers including performance-based and shared savings financing solutions with the capital from this financing.

“In addition to breakthroughs in technology, Stem is focused on driving business model innovation,” said Prakesh Patel, Stem’s vice president of capital markets and strategy. “By working closely with CFI, I believe we have created a unique offering to help accelerate customer adoption of Stem systems. This transaction paves the way for Stem to become one of the first efficiency technologies to achieve bankability.”

“Deployment capital is essential for Stem to get their technology in the hands of their customers – many of whom prefer a “pay as you save” offering,” added Jigar Shah, a principal at Clean Feet, and founder of the largest solar services company, SunEdison.

Allowing companies to install Stem’s technology with little or nothing down will help those companies save money at the same time it allows Stem to ramp up.  This is great news for the solar industry since it is posed to provide the energy that Stem’s system later distributes as needed to offset those costly demand peaks.

Of course, this isn’t exactly great news for the utilities who, if this technology were widely adopted, would see a huge revenue hit as more and more commercial customers were able to lop-off the most expensive energy they now have to procure.  Whether it is the continuation of net-metering on the residential side or the ability to eliminate the worst of demand charges on the commercial side, the pressure on the utilities will only continue to grow.  But for their customers, things have never looked brighter.

08/23/13

  07:36:00 am, by Jim Jenal - Founder & CEO   , 347 words  
Categories: Utilities, SCE, Solar Policy

Are the Power Grid's Days Numbered?

A fascinating piece over at Bloomberg Businessweek Technology turns our question into a declaration: Why the U.S. Power Grid’s Days are Numbered in a piece by three authors, Chris Martin, Mark Chediak and Ken Wells.  But it isn’t the grid so much as the 3,200 utilities scattered across the landscape that are headed for extinction.  (H/t SolarWakeup.com)

The article traces the story, familiar to readers of this blog, about the downward spiral facing utilities - as their prices rise, more customers get to the point where solar makes economic sense.  But that switch further erodes the revenue base for the utilities so they must raise their rates yet again, driving away yet more customers and on it goes.  Clearly not a sustainable future - for the monopolistic utilities.  (Perhaps that is why some - and here we mean you, SCE - have so little sense of humor these days?)

Here is one of the many insightful quotes compiled by the authors:

“The technology and energy sectors will no longer simply be one another’s suppliers and customers,” the report says. “They will be competing directly. For the technology sector, the first rule is: Costs always go down. For the energy sector and for all extractive industries, costs almost always go up. Given those trajectories, counterintuitively, the coming tussle between solar and conventional energy is not going to be a fair fight.”

(Quoting from the Bernstein energy industry black book.)

Hmmm… solar beating up on the utilities so badly that it isn’t a “fair fight” is a future that many of us would pay to see.

While that future might seem inevitable to reporters viewing this from a distance, those of us in the solar industry know that we have a major fight on our hands.  Today we have a sympathetic legislature in Sacramento, but that could change and our allies replaced by adversaries almost overnight.  Surely the utility industry has the bucks to lobby legislators in ways that the solar industry will never be able to match.

As I said, the article makes for great Friday reading and I commend it to you.

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Jim Jenal is the Founder & CEO of Run on Sun, Pasadena's premier installer and integrator of top-of-the-line solar power installations.
In addition, Run on Sun offers solar consulting services, working with consumers, utilities and municipalities to help them make solar power affordable and reliable.

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